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Corus Entertainment announces third quarter results

Posted on: Wednesday, 15 July 2009, 06:00 CDT

TORONTO, July 15 /PRNewswire-FirstCall/ - Corus Entertainment Inc. (TSX: CJR.B; NYSE: CJR) announced its third quarter financial results today.

"We continue to position our Company for growth in an improving economy," said John Cassaday, President and CEO, Corus Entertainment. "The acquisition of two digital networks, our ratings strength in Television and Radio, our successful launch of HBO Canada and its influence on Pay TV growth and the global expansion of Bakugan are all indicators of the underlying strength of Corus' assets."

Third Quarter Results ---------------------

Consolidated revenues for the three months ended May 31, 2009 were $195.4 million, down 6% from $207.8 million last year. Consolidated segment profit was $61.4 million, down 14% from $71.8 million last year. Net loss for the quarter was $145.0 million ($1.81 basic and diluted), compared to net income of $37.7 million ($0.45 basic and diluted) last year. Net loss for the quarter includes a $175.0 million broadcast license and goodwill impairment charge. The prior year's quarter benefited from $10.0 million in recoveries related to income tax changes and incurred a charge related to disputed regulatory fees. Removing the impact of these items results in adjusted basic earnings per share of $0.36 in the current year and $0.41 in the prior year.

Corus Television contributed quarterly revenues of $129.8 million, down 1% from $131.0 million last year, led by subscriber revenue growth of 13% and continued growth in advertising targeted to women. Quarterly segment profit decreased to $50.7 million, down 5% from $53.4 million last year.

Corus Radio revenues were $65.5 million, down 15% from $77.0 million last year. Segment profit was $16.1 million, down 35% from $24.7 million last year.

Year-to-Date Results --------------------

Consolidated revenues for the nine months ended May 31, 2009 were $593.5 million, down 1% from $601.4 million last year. Consolidated segment profit was $193.8 million, down 5% from $204.9 million last year. Net loss for the nine months was $75.4 million ($0.94 basic and diluted), compared to net income of $112.4 million ($1.35 basic and $1.32 diluted) last year. Net loss for the year-to-date includes a $175.0 million broadcast license and goodwill impairment charge.

Corus Television contributed nine month revenues of $394.5 million, up 3% from $383.6 million last year. Segment profit increased to $162.4 million, up 1% from $161.2 million last year.

Corus Radio revenues for the nine months were $199.0 million, down 9% from $218.0 million last year. Segment profit was $45.2 million, down 25% from $60.4 million last year.

Acquisition of SexTV and Drive-In Classics ------------------------------------------

On July 14, 2009, Corus Entertainment announced that it had reached an agreement to purchase the specialty television services Drive-In Classics and SexTV from CTVglobemedia. The transaction is subject to approval by the Canadian Radio-television and Telecommunications Commission (CRTC). The combined acquisition price for both services is $40 million Cdn.

Corus Entertainment Inc. reports in Canadian dollars. About Corus Entertainment Inc.

Corus Entertainment Inc. is a Canadian-based media and entertainment company. Corus is a market leader in specialty television and radio with additional assets in pay television, advertising services, television broadcasting, children's book publishing and children's animation. The company's multimedia entertainment brands include YTV, Treehouse, W Network, CosmoTV, VIVA, Movie Central, HBO Canada, Nelvana, Kids Can Press and radio stations including CKNW, CKOI and Q107. Corus creates engaging branded entertainment experiences for its audiences across multiple platforms. A publicly traded company, Corus is listed on the Toronto (CJR.B) and New York (CJR) exchanges. Experience Corus on the web at www.corusent.com.

The unaudited consolidated financial statements and accompanying notes for the quarter ended May 31, 2009 and Management's Discussion and Analysis are available on the Company's website at www.corusent.com in the Investor Relations section.

A conference call with Corus senior management is scheduled for July 15, 2009 at 2 p.m. ET. While this call is directed at analysts and investors, members of the media are welcome to listen in. The dial-in number for the conference call for North America is 1-800-918-9577 and for local/international callers is 416-981-9000. PowerPoint slides for the call will be posted at 1:45 p.m. ET on July 15, 2009 and can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.

This statement contains forward-looking information and should be read subject to the following cautionary language:

To the extent any statements made in this report contain information that is not historical, these statements are forward-looking statements and may be forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking statements"). These forward-looking statements related to, among other things, our objectives, goals, strategies, intentions, plans, estimates and outlook, including advertising, program, merchandise and subscription revenues, operating costs and tariffs, taxes and fees, and can generally be identified by the use of the words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Although Corus believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, including without limitation factors and assumptions regarding advertising, program, merchandise and subscription revenues, operating costs and tariffs, taxes and fees and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things: our ability to attract and retain advertising revenues; audience acceptance of our television programs and cable networks; our ability to recoup production costs, the availability of tax credits and the existence of co-production treaties; our ability to compete in any of the industries in which we do business; the opportunities (or lack thereof) that may be presented to and pursued by us; conditions in the entertainment, information and communications industries and technological developments therein; changes in laws or regulations or the interpretation or application of those laws and regulations; our ability to integrate and realize anticipated benefits from our acquisitions and to effectively manage our growth; our ability to successfully defend ourselves against litigation matters arising out of the ordinary course of business; and changes in accounting standards. Additional information about these factors and about the material assumptions underlying such forward-looking statements may be found in our Annual Information Form. Corus cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Corus, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise required by applicable securities laws, we disclaim any intention or obligation to publicly update or revise any forward-looking statements whether as a result of new information, events or circumstances that arise after the date thereof or otherwise.

CORUS ENTERTAINMENT INC. CONSOLIDATED BALANCE SHEETS As at As at (unaudited) May 31, August 31, (in thousands of Canadian dollars) 2009 2008 ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 32,377 19,642 Accounts receivable 161,875 157,440 Income taxes recoverable - 1,615 Prepaid expenses and other 9,658 10,135 Program and film rights 135,938 131,301 Future tax asset 1,346 9,593 ------------------------------------------------------------------------- Total current assets 341,194 329,726 ------------------------------------------------------------------------- Tax credits receivable 29,938 21,952 Investments and other assets 29,008 93,086 Property, plant and equipment 69,962 73,562 Program and film rights 118,741 103,163 Film investments 91,793 80,819 Broadcast licenses 548,883 533,491 Goodwill 689,096 797,854 ------------------------------------------------------------------------- 1,918,615 2,033,653 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities 184,375 196,026 Income taxes payable 5,024 - ------------------------------------------------------------------------- Total current liabilities 189,399 196,026 ------------------------------------------------------------------------- Long-term debt 681,426 692,750 Other long-term liabilities 91,658 59,936 Future tax liability 92,883 87,699 ------------------------------------------------------------------------- Total liabilities 1,055,366 1,036,411 ------------------------------------------------------------------------- Non-controlling interest 19,784 20,237 ------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Share capital 840,495 848,257 Contributed surplus 15,870 17,304 Retained earnings 13,652 131,594 Accumulated other comprehensive loss (26,552) (20,150) ------------------------------------------------------------------------- Total shareholders' equity 843,465 977,005 ------------------------------------------------------------------------- 1,918,615 2,033,653 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CORUS ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited) Three months ended Nine months ended (in thousands of May 31, May 31, Canadian dollars except ------------------------------------------ per share amounts) 2009 2008 2009 2008 ------------------------------------------------------------------------- Revenues 195,354 207,819 593,497 601,382 Direct cost of sales, general and administrative expenses 133,938 136,047 399,730 396,487 Depreciation 4,795 4,974 14,986 16,253 Interest expense 8,945 10,345 29,013 31,407 Broadcast license and goodwill impairment 175,000 - 175,000 - Disputed regulatory fees 1,476 9,734 4,188 9,734 Other expense (income), net 2,330 63 (1,279) 3,988 ------------------------------------------------------------------------- Income (loss) before income taxes and non-controlling interest (131,130) 46,656 (28,141) 143,513 Income tax expense 12,417 7,533 44,123 27,124 Non-controlling interest 1,483 1,449 3,104 3,960 ------------------------------------------------------------------------- Net income (loss) for the period (145,030) 37,674 (75,368) 112,429 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings (loss) per share Basic $(1.81) $0.45 $(0.94) $1.35 Diluted $(1.81) $0.45 $(0.94) $1.32 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Three months ended Nine months ended (unaudited) May 31, May 31, (in thousands of ------------------------------------------ Canadian dollars) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net income (loss) for the period (145,030) 37,674 (75,368) 112,429 Other comprehensive income (loss), net of tax Unrealized foreign currency translation adjustment (1,791) 213 526 (1,054) Unrealized change in fair value of available-for-sale investments, net of tax 425 (1,121) (355) (938) Recognition of change in fair value of available-for sale assets in net income - - 2,077 - Unrealized change in fair value of cash flow hedges, net of tax 857 390 (8,650) (11,400) ------------------------------------------------------------------------- (509) (518) (6,402) (13,392) ------------------------------------------------------------------------- Comprehensive income (loss) for the period (145,539) 37,156 (81,770) 99,037 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CORUS ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY Three months ended Nine months ended (unaudited) May 31, May 31, (in thousands of ------------------------------------------ Canadian dollars) 2009 2008 2009 2008 ------------------------------------------------------------------------- Share capital Balance, beginning of period 840,363 874,911 848,257 882,244 Issuance of shares under stock option plan 132 945 490 10,783 Shares repurchased - (10,170) (8,450) (27,571) Repayment of executive stock purchase loans - - 198 230 ------------------------------------------------------------------------- Balance, end of period 840,495 865,686 840,495 865,686 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Contributed surplus Balance, beginning of period 14,516 13,515 17,304 10,250 Stock-based compensation 1,363 2,237 3,713 6,156 Settlement of long-term incentive plan - - (5,138) - Exercise of stock options (9) (11) (9) (665) ------------------------------------------------------------------------- Balance, end of period 15,870 15,741 15,870 15,741 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Retained earnings Balance, beginning of period 170,684 123,252 131,594 95,568 Cumulative impact of accounting changes - - - (1,594) ------------------------------------------------------------------------- Adjusted opening balance 170,684 123,252 131,594 93,974 Net income (loss) for the period (145,030) 37,674 (75,368) 112,429 Dividends (12,002) (12,347) (35,941) (35,238) Share repurchase excess - (8,420) (6,633) (31,006) ------------------------------------------------------------------------- Balance, end of period 13,652 140,159 13,652 140,159 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Accumulated other comprehensive loss Balance, beginning of period (26,043) (18,036) (20,150) (12,169) Cumulative impact of accounting changes - - - 7,007 ------------------------------------------------------------------------- Adjusted opening balance (26,043) (18,036) (20,150) (5,162) Other comprehensive loss, net of tax (509) (518) (6,402) (13,392) ------------------------------------------------------------------------- Balance, end of period (26,552) (18,554) (26,552) (18,554) ------------------------------------------------------------------------- ------------------------------------------------------------------------- CORUS ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended Nine months ended (unaudited) May 31, May 31, (in thousands of ------------------------------------------ Canadian dollars) 2009 2008 2009 2008 ------------------------------------------------------------------------- OPERATING ACTIVITIES Net income (loss) for the period (145,030) 37,674 (75,368) 112,429 Add (deduct) non-cash items: Depreciation 4,795 4,974 14,986 16,253 Broadcast license and goodwill impairment 175,000 - 175,000 - Amortization of program and film rights 41,191 35,875 117,708 107,862 Amortization of film investments 5,686 8,885 15,724 21,496 Future income taxes 1,200 (1,966) 8,810 (7,029) Non-controlling interest 1,483 1,449 3,104 3,960 Stock-based compensation 1,520 2,284 3,532 5,972 Imputed interest 1,833 1,591 5,144 4,728 Other gains and losses 197 543 (5,232) 1,680 Net change in non-cash working capital balances related to operations 3,087 (5,029) (4,420) (29,940) Payment of program and film rights (48,792) (40,657) (143,967) (118,339) Net additions to film investments (8,806) (13,212) (33,722) (42,690) ------------------------------------------------------------------------- Cash provided by operating activities 33,364 32,411 81,299 76,382 ------------------------------------------------------------------------- INVESTING ACTIVITIES Additions to property, plant and equipment (4,259) (2,975) (10,043) (10,102) Business combinations - - (74,950) (774) Cash held in escrow - - 74,950 - Net cash flows for investments and other assets (5) (2,600) 6,628 (4,021) Decrease in public benefits associated with acquisitions (302) (958) (1,436) (2,903) ------------------------------------------------------------------------- Cash used in investing activities (4,566) (6,533) (4,851) (17,800) ------------------------------------------------------------------------- FINANCING ACTIVITIES Increase (decrease) in bank loans (23,968) 636 (10,298) 21,043 Issuance of shares under stock option plan 123 934 481 10,118 Shares repurchased - (18,590) (15,083) (58,577) Dividends paid (12,000) (12,436) (36,017) (34,027) Dividend paid to non-controlling interest - (139) (2,994) (1,742) Other - (147) 198 (226) ------------------------------------------------------------------------- Cash used in financing activities (35,845) (29,742) (63,713) (63,411) ------------------------------------------------------------------------- Net change in cash and cash equivalents during the period (7,047) (3,864) 12,735 (4,829) Cash and cash equivalents, beginning of period 39,424 32,382 19,642 33,347 ------------------------------------------------------------------------- Cash and cash equivalents, end of period 32,377 28,518 32,377 28,518 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CORUS ENTERTAINMENT INC. BUSINESS SEGMENT INFORMATION Three months ended May 31, 2009 Tele- Elimi- Conso- Radio vision Corporate nations lidated ------------------------------------------------------------------------- Revenues 65,508 129,846 - - 195,354 Direct cost of sales, general and administrative expenses 49,436 79,174 5,328 - 133,938 ------------------------------------------------------------------------- Segment profit 16,072 50,672 (5,328) - 61,416 Depreciation 1,677 2,174 944 - 4,795 Interest expense 243 1,467 7,235 - 8,945 Goodwill and broadcast license impairment 175,000 - - - 175,000 Disputed regulatory fees 821 655 - - 1,476 Other expense (income), net 3,165 (1,324) 489 - 2,330 ------------------------------------------------------------------------- Income (loss) before income taxes and non-controlling interest (164,834) 47,700 (13,996) - (131,130) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended May 31, 2008 Tele- Elimi- Conso- Radio vision Corporate nations lidated ------------------------------------------------------------------------- Revenues 76,964 130,957 - (102) 207,819 Direct cost of sales, general and administrative expenses 52,276 77,553 6,320 (102) 136,047 ------------------------------------------------------------------------- Segment profit 24,688 53,404 (6,320) - 71,772 Depreciation 1,615 2,309 1,050 - 4,974 Interest expense 262 1,147 8,936 - 10,345 Disputed regulatory fees 5,421 4,313 - - 9,734 Other expense (income), net (35) 940 (842) - 63 ------------------------------------------------------------------------- Income (loss) before income taxes and non-controlling interest 17,425 44,695 (15,464) - 46,656 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Nine months ended May 31, 2009 Tele- Elimi- Conso- Radio vision Corporate nations lidated ------------------------------------------------------------------------- Revenues 198,971 394,526 - - 593,497 Direct cost of sales, general and administrative expenses 153,778 232,093 13,859 - 399,730 ------------------------------------------------------------------------- Segment profit 45,193 162,433 (13,859) - 193,767 Depreciation 4,950 6,959 3,077 - 14,986 Interest expense 697 3,867 24,449 - 29,013 Goodwill and broadcast license impairment 175,000 - - - 175,000 Disputed regulatory fees 2,183 2,005 - - 4,188 Other expense (income), net 2,594 (4,965) 1,092 - (1,279) ------------------------------------------------------------------------- Income (loss) before income taxes and non-controlling interest (140,231) 154,567 (42,477) - (28,141) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Nine months ended May 31, 2008 Tele- Elimi- Conso- Radio vision Corporate nations lidated ------------------------------------------------------------------------- Revenues 217,967 383,617 - (202) 601,382 Direct cost of sales, general and administrative expenses 157,522 222,408 16,759 (202) 396,487 ------------------------------------------------------------------------- Segment profit 60,445 161,209 (16,759) - 204,895 Depreciation 4,788 7,609 3,856 - 16,253 Interest expense 779 3,525 27,103 - 31,407 Disputed regulatory fees 5,421 4,313 - - 9,734 Other expense (income), net (163) 5,649 (1,498) - 3,988 ------------------------------------------------------------------------- Income (loss) before income taxes and non-controlling interest 49,620 140,113 (46,220) - 143,513 ------------------------------------------------------------------------- -------------------------------------------------------------------------

SOURCE Corus Entertainment Inc.

Source: PR Newswire

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